Thailand will ensure its plan to secure supplies with other Southeast Asian nations will not affect the market after a slump in prices prompted the government to assure returns for farmers.

Thailand, the world’s biggest rice exporter, is proposing a stockpile to cope with emergencies after restrictions on shipments last year by producers including Vietnam, the second biggest exporter, drove up prices to a record and sparked cooking riots from Haiti to Egypt.

Southeast Asia, home to 570 million people, consumes about 68 million tons of milled rice a year, according to the US Department of Agriculture.

The 10 member nations of the Association of Southeast Asian Nations (ASEAN) would discuss the proposal at its 14th summit in Thailand scheduled for February 27-March 1, Piromya said.

“We will discuss what the stockpile is for and what the appropriate level will be,” he said. The size “could range between a few percent or 5 percent of consumption.”

Thailand may propose the region should have three million tons of rice as a security stockpile, the Nation newspaper reported January 14, citing an unidentified official at the trade ministry.

The other nations in the region are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore and the Philippines.

Not everyone agrees a regional rice stockpile will work or that it is needed.

“The reason why there is a unified effort now is not clear as most countries have stockpiles,” said Anthony Lam, a general manager at Hong Kong-based trader Golden Resources Development International Ltd. “People would question the intention and what impact governments want on the market.”

Deputy Commerce Minister Alongkorn Ponlaboot Wednesday said Thailand and Vietnam have made an initial agreement on devising strategies together on rice supply and prices.

“This is an early step; both sides agreed that we should have a memorandum of understanding,” Ponlaboot said. “There will be further discussion at the ASEAN summit.”

Thailand and Vietnam, which supply almost half of global rice exports, may lead to cooperation similar to the Organization of Petroleum Exporting Countries, or OPEC, he said last month.

Source: Bloomberg